LONDON (Reuters) - Job cuts announced by European banks have tumbled in 2016, as they work through a backlog of layoffs unveiled in previous years and struggle to find new areas where they can trim staff without threatening profitable operations.

Some industry watchers say lenders might even recruit a little next year overall, provided the market rally following Donald Trump's U.S. presidential election victory continues, although banks themselves are looking to joint ventures with rivals to cut costs further - signaling more layoffs.

On Tuesday, UniCredit <CRDI.MI> said it plans to cut 14,000 jobs by 2019, bringing the total number of layoffs announced by 17 major banks in Europe this year to just under 50,000, according to analysis by Reuters.

But in the second half of 2015 alone, the number of announced job losses was 130,000, with culls at HSBC <HSBA.L>, Standard Chartered <STAN.L>, Deutsche Bank <DBKGn.DE> and Credit Suisse <CSGN.S> among others.

Widely seen to be lagging their American counterparts in an era of low interest rates and tight regulation, European banks have implemented major restructurings since 2011 in an attempt to boost profits and stay competitive.

This year the cuts at UniCredit, along with layoffs at Commerzbank <CBKG.DE>, ING Groep <INGA.AS> and more at Credit Suisse, accounted for over 25,000 of the announced job losses.

However, other banks held back despite their repeated emphasis that low profit margins caused by low or negative interest rates and new regulations imposed on the industry since the global financial crisis mean they need to slash costs.

That's because many are still implementing previously announced reductions, as well as finding they are running out of areas where they can easily lay off staff, having slashed their numbers in retail and investment banking.

"Banks seem to be reasonably content and comfortable with their size right now," said Richard Hoar, a director at recruitment firm Goodman Mason. "They've trimmed down a lot and might actually need to go up a bit next year if the market bounce continues."

One of the problems for banks has been that while they have cut back heavily in some areas, the new rules and ageing IT systems have forced them to bulk up their headcount in areas such as regulatory compliance and technology.

The result is that while major banks have made hundreds of thousands of job cuts since the 2008 crisis, the overall number of people working in Europe's financial industry has stayed relatively steady. Total headcount at banks on the STOXX Europe 600 Banks Index <.SX7P> was 2,362,677 at the end of 2015, just 5.2 percent below the 2,491,125 employees in 2007, according to data compiled by Reuters.

"Staff numbers haven't come down much because there's been a dramatic shift in who the banks employ. There has been ramp-up in IT and tech staff as they automate, and a reduction in administrative functions," said Xavier Van Hove, fund manager at GAM.

NEW WAYS OF CUTTING COSTS

With the major restructurings of the past five years failing to revive profitability, the European banks are now being forced to think of more innovative ways to cut costs.

In August, UBS chief executive Sergio Emmotti said the industry would have to share economies of scale by forming joint ventures in certain business areas. Credit Suisse has since said it is in talks with another bank about a cost-sharing project, without elaborating on what that involves.

Octavio Marenzi, CEO of consultancy firm Opimas, said he expects banks will announce plans to start sharing back-office administrative operations in certain areas, where they have little competitive advantage to going it alone.

"We'll see more of those kinds of plays where banks try and get the same economies of scale without full blown mergers ... merging portions of their business, undifferentiated aspects of their business, cost centers ... and try and reduce things that way," he said, suggesting fixed income operations as one area likely to see this happen.

However, some investors think banks will need to go further, saying the cuts to areas such as trading and investment banking have left some lenders too small to go it alone.

"The problem for European investment banks is the lack of scale, not the quality of the banks," said Eric Knight, founder of activist investor Knight-Vinke, who once tried to force UBS to spin off its investment bank. "They're unprofitable because they're too small."

He believes there will eventually be mergers between U.S. or Chinese banks and European lenders, because they lack scale in wholesale trading and have no deep domestic market to subsidize their activities.

In August, top executives from Deutsche Bank <DBKGn.DE> and Commerzbank <CBKG.DE> held talks on a potential combination of Germany's two biggest lenders, while Sweden's Nordea <NDA.ST> confirmed in October it had approached Dutch state-owned ABN AMRO <ABNd.AS> for a takeover.

But so far regulatory reluctance and governments wary of losing control over their national lenders mean few full-blown mergers are likely to come about in the near future.

"Regulators clearly do not want larger banks," Knight told a banking summit in November. "But the idea that these banks could carry on just shrinking their way into a successful strategy is not tenable."